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IN THE UNITED STATES COURT OF FEDERAL CLAIMS
THE PEOPLE OF THE STATE OF CALIFORNIA EX REL. EDMUND G. BROWN JR., ATTORNEY GENERAL OF THE STATE OF CALIFORNIA, and the CALIFORNIA DEPARTMENT OF WATER RESOURCES BY AND THROUGH ITS CALIFORNIA ENERGY RESOURCES SCHEDULING DIVISION, Plaintiffs, v. THE UNITED STATES, Defendant.
No. 07-184C THE PEOPLE'S FIRST AMENDED COMPLAINT FOR DAMAGES AND DECLARATORY RELIEF
COMPLAINT FOR DAMAGES AND DECLARATORY RELIEF Plaintiffs the People of the State of California ex rel. Edmund G. Brown Jr., Attorney General of the State of California; and the California Department of Water Resources, by and through its California Energy Resources Scheduling Division, and acting solely under the authority and powers created by California Assembly Bill 1 of the First Extraordinary Session of 2001-2002, codified in Sections 80000 through 80270 of the California Water Code, and not under its powers and responsibilities with respect to the State Water Resources Development System ("CERS" and collectively with the People of the State of California ex rel. Edmund G. Brown Jr., Attorney General of the State of California, "the People"), allege:
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SUMMARY 1. This is an action for damages and declaratory relief against the United States.
The claims in this action arise out of sales of electric power and ancillary services (hereinafter "electric power") by the Bonneville Power Administration ("BPA") and the Western Area Power Administration ("WAPA") (collectively, "the Agencies") in the California wholesale electric power markets from January 17, 2001 through June 20, 2001 for which CERS paid, including but not limited to energy exchanges between the California Independent System Operator Corporation ("ISO") and the Agencies for which CERS paid either in money or electric power. The California wholesale markets were operated by the California Independent System Operator Corporation ("ISO") and California Power Exchange Corporation ("PX") under tariffs filed with and approved by the Federal Energy Regulatory Commission ("FERC"). The People's claim further arises out of the Agencies' bilateral sales to CERS, which was acting as the functional equivalent of the ISO and PX from January 17, 2001 through June 20, 2001. 2. The Agencies' transactions in the California wholesale markets pursuant to the
ISO and PX Tariffs and pursuant to certain written agreements gave rise to binding contractual obligations that the Agencies owe to the other market participants, including CERS. CERS is a direct party to and/or third party beneficiary of the Agencies' contractual obligations. The signatories to the Agencies' agreements had authority to enter into the agreements and to bind the Agencies contractually. The Agencies have breached their contractual obligations, entitling the People to the relief requested in this Complaint. 3. FERC has determined that all sellers in the California wholesale electric markets
charged rates that were unjust, unreasonable, and unlawful. Pursuant to the ISO and PX Tariffs that govern those markets, FERC has corrected and reduced the rates that all sellers, including the Agencies, were entitled to charge for sales in those markets for the period October 2, 2000
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through June 20, 2001 ("the Refund Period"). To remedy the harm caused by the sellers' unlawful prices, FERC ordered all sellers in the California markets to pay refunds for their unlawful overcharges. In addition, pursuant to the decision of the United States Court of Appeals for the Ninth Circuit ("Ninth Circuit") in Pub. Utils. Comm'n of Cal. v. FERC, 462 F.3d 1027, 1052-53 (9th Cir. 2006) ("CPUC"), FERC's decision not to provide relief for energy exchanges during the Refund Period has been reversed, and the Agencies will be obligated to refund overcharges in exchange transactions at such time as FERC determines the lawful rates and terms of such transactions. References in this Complaint to sales and sellers, and purchases and buyers, and rates, charges, and the like, include energy exchanges and the terms thereof. 4. On September 6, 2005, the Ninth Circuit held that FERC's statutory refund
authority did not extend to governmental entities such as BPA and WAPA. Bonneville Power Admin. v. Federal Energy Regulatory Comm'n, 422 F.3d 908 (9th Cir. 2005). The Ninth Circuit's order put the Agencies and other governmental entities in a unique position among ISO and PX market participants in that they alone may seek to benefit from refunds paid by others while escaping liability for their own unlawful overcharges. The Ninth Circuit noted, however, that market participants (such as CERS) could bring claims in court directly against governmental entities like the Agencies to enforce the contractual obligations created by the FERC tariffs and the related agreements under which the Agencies sold power into the ISO and PX markets. Id. at 925. The Agencies are now contractually obligated to reimburse the People for the difference between the rates that the Agencies charged during the Refund Period, including but not limited to the terms of energy exchanges, and the lawful, corrected rates under the tariffs. 5. Amounts the People recover will ultimately benefit California ratepayers.
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PARTIES 6. Plaintiffs, the People of the State of California, represented by EDMUND G.
BROWN JR., Attorney General of the State of California, under his power as parens patriae, are the ultimate beneficiaries of the PX and ISO tariffs and the transactions between DWR and the Agencies. 7. The California Department of Water Resources is, and at all times relevant to this
Complaint was, an agency of the State of California with its principal offices in Sacramento, California. For all transactions alleged in this complaint, the California Department of Water Resources was acting by and through its California Energy Resources Scheduling Division. 8. 9. Defendant is the United States, acting through BPA and WAPA. BPA is a federal power marketing administration within the Department of
Energy responsible for marketing hydroelectric power generated by the Federal Columbia River Power System and other electric power generated by federal facilities in the Pacific Northwest. 10. WAPA is a federal power marketing administration within the Department of
Energy responsible for marketing electricity from federal water projects in a fifteen-state region of the West. 11. The Agencies sold electric power in California and the Pacific Northwest markets
and, in particular, voluntarily elected to transact business in the ISO and PX markets during the relevant time period and sell power to CERS pursuant to the terms and conditions of the Western Systems Power Pool Agreement ("the WSPP Agreement"), including its price schedules. JURISDICTION 12. This Court has jurisdiction over the People's claims for relief pursuant to the
Contract Disputes Act ("CDA"), 41 U.S.C. § 609(a)(1), and the Tucker Act, 28 U.S.C. §§ 1491(a)(1) and 1491(a)(2). 4
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13.
With respect to the BPA, the People's claims fall within this Court's jurisdiction
under the Tucker Act, and not within the Ninth Circuit's jurisdiction under the Northwest Power Act, 16 U.S.C. § 839f(e). This lawsuit is not a challenge to a final agency action or to the implementation of a rate, term, or condition mandated by the Northwest Power Act, or to any other agency action contemplated by the Northwest Power Act's judicial review provision, 16 U.S.C. § 839f(e). Moreover, the contractual provisions at issue are not rates set by BPA under the procedures of the Northwest Power Act. Rather, the contractual obligations at issue involve power sales made by BPA in the ISO and PX markets pursuant to agreements, such as Tariffs and the WSPP Agreement, entered into at BPA's discretion, independent of any statutory obligation under the Northwest Power Act, and are not reflected in the administrative record of any BPA proceeding. COMMON ALLEGATIONS 14. e People's claims arise out of the Agencies' transactions of electric power from
January 17, 2001 through June 20, 2001, in wholesale markets that the ISO and PX operated (the "ISO and PX markets") and with the ISO, pursuant to written agreements and tariffs, all of which were filed with FERC, and pursuant to the WSPP Agreement. FERC has determined that all sellers in the ISO and PX markets charged rates that were unjust, unreasonable, and unlawful and, pursuant to the tariffs governing those markets, has corrected and reduced the rates that all sellers, including the Agencies, were entitled to charge for various sales during the Refund Period. In addition, (a) pursuant to the decision of the Ninth Circuit Court of Appeals in CPUC, FERC's decision not to provide relief for energy exchanges and multi-day sales during the Refund Period has been reversed, and the Agencies are contractually obligated to permit the Agencies' accounts at the ISO and PX to be adjusted to reflect all pricing changes at such time as FERC determines the corrected, maximum rates of energy exchanges, and (b) the Ninth Circuit 5
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Court of Appeals in Port of Seattle v. FERC, 499 F. 3d 1016 (9th Cir. 2007) (reh'g pending)("Port of Seattle") has ordered FERC to reconsider its denial of refunds with respect to CERS's bilateral transactions in the Pacific Northwest pursuant to the WSPP Agreement. 15. As a result of FERC's modification of the tariffs and adjustment of the prices
charged and received by sellers in the ISO and PX markets, including BPA, the adjusted rates became the only lawful and authorized prices for those sales. BPA became contractually obligated to reimburse purchasers for the difference between the rates BPA received for its sales in the ISO and PX markets and the lower FERC-adjusted lawful rates. BPA has consistently taken the position that it has no obligation to refund or credit to buyers the difference between the rates it received and the lawful rate as set by FERC. In fact, for transactions in which it was a buyer, BPA seeks to pay only the lower adjusted prices determined by FERC, but for transactions in which it was a seller, BPA seeks to retain the unadjusted prices which are now unauthorized and unlawful. 16. In 1996, California enacted Assembly Bill 1890 ("AB 1890") to restructure
California's electric power markets in order to facilitate the development of competition for the generation and sale of electric power. AB 1890 provided for the creation of two new wholesale market institutions to facilitate the buying and selling of electric power: the ISO and the PX, which are non-profit, public benefit corporations organized under California law, and subject to the exclusive regulatory jurisdiction of the FERC. California investor-owned utilities were required, in general, to purchase through the ISO and the PX substantially all of the wholesale electric power that they needed in order to fulfill their obligation to serve their retail customers, including electric energy and certain ancillary services. The ancillary services in this case consist of sales of electric power generation supply to maintain the reliability of the transmission
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of electricity from generators to customers. Other entities, including the Agencies, were permitted voluntarily to buy or sell electric power in the ISO and PX markets. 17. The ISO and PX Tariffs are the legal equivalent of federal regulations and also
establish contractual obligations among the market participants, prescribing the rules, requirements and/or pricing formulas for all transactions in the ISO and PX markets. The written agreements that the Agencies signed incorporate by reference the entirety of the ISO and PX Tariffs, which thus give rise to contractual obligations on the part of the Agencies. The ISO and PX Tariffs themselves are voluminous and subject to judicial notice by this Court. Excerpts of key provisions of the ISO Tariff are attached to this Complaint as Exhibit A and are fully incorporated herein. 18. The PX was created to function as California's principal power market. The PX
acted as a clearinghouse for daily and hourly markets and submitted schedules of electric power to the ISO in which scheduled generation for the following day equaled scheduled demand. Under its tariff, the PX was charged with responsibility for, among other things, settling energy trades between PX market participants and preparing and distributing to PX market participants invoices reflecting the amounts payable and receivable by them in connection with their trading through the PX. 19. Although the role of the ISO has changed over time, it was created as the entity
responsible for operating and maintaining California's electric transmission grid, including resolving transmission congestion and purchasing electric power to maintain system reliability. To meet these obligations, the ISO operated, and still operates, wholesale markets for real-time energy purchases and ancillary services. 20. In general, in operating its real-time market, the ISO set a single market-clearing
price based on bids submitted by sellers pursuant to the ISO Tariff. Every seller in the ISO
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auction market received, and every purchaser paid, the same market-clearing price that the ISO set for any given interval, even if some sellers had offered to sell at a lower price. See ISO Tariff § 2.5 (formulas for determining market clearing price in ISO auctions); ISO Tariff Appendix A, Master Definitions Supplement ("Market Clearing Price"). 21. Thus, the PX operated a day-ahead and a day-of market intended to supply the
electric power needed to meet projected electric power demand. The ISO accepted the PX schedules and then procured any electric power needed to make adjustments in real time to ensure that supply met actual demand and the electric grid operated properly and safely. The ISO charged market participants pursuant to its FERC-approved tariff. Ultimately, as a result of market dysfunction and manipulation, and resulting power shortages, vast quantities of electric power were purchased and sold through the ISO market, rather than through the PX market, during the relevant time period. 22. Although the ISO obtained power primarily through its auction markets, the
auction markets did not always provide sufficient electric power to maintain the reliability of California's electric grid. Under such circumstances, the ISO Tariff permitted the ISO to solicit emergency electric power, known as "out-of-market" or "OOM" electric power, through other methods, such as phone calls to electric power marketers or generators. See ISO Tariff § 2.3.5.1.5 (permitting such purchases). OOM transactions were contemplated in the ISO Tariff as a backstop to the ISO's auction market. Pub. Utils. Comm'n of Cal. v. FERC, 462 F.3d 1027, 1052-53 (9th Cir. 2006) ("CPUC"). Terms of these transactions were closely linked to the prices in the ISO single-price auction market. Id. Because the ISO procured OOM power in order to maintain the reliability of California's electric grid, the ISO procured the electric power at whatever price or terms offered, even if that price or terms exceeded applicable price caps, and then charged market participants, including CERS, for this electric power. At the instance of the
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ISO, after January 17, 2001, CERS acted as the fiscally responsible entity and paid and/or provided exchange power for electric power procured by the ISO for the purpose of maintaining system reliability. 23. As required under the ISO Tariff, the Agencies executed ISO Scheduling
Coordinator Agreements. The Scheduling Coordinator Agreement provided, inter alia, that the ISO Scheduling Coordinator "will abide by, and will perform all of the obligations under the ISO Tariff placed on Scheduling Coordinators in respect of all matters set forth therein including, without limitation, all matters relating to the scheduling of Energy and Ancillary Services on the ISO controlled grid, . . . [and] billing and payments . . . ." ISO Tariff Appendix B, Scheduling Coordinator Agreement § 2(B). The Scheduling Coordinator Agreement further provided that "[t]he ISO Tariff is incorporated herein and made a part hereof." ISO Tariff Appendix B, Scheduling Coordinator Agreement § 8. A copy of BPA's Scheduling Coordinator Agreement is attached to this Complaint as Exhibit B. A copy of WAPA's First Amended Scheduling Coordinator Agreement is attached to this Complaint as Exhibit C. These agreements are fully incorporated in this Complaint. 24. The ISO and PX Tariffs filed with FERC contained requirements governing
transactions in the ISO and the PX, including transactions with the ISO. The Agencies signed agreements that expressly incorporated the terms and conditions of the ISO and PX Tariffs and expressly agreed to abide by their terms and conditions. Moreover, by voluntarily electing to transact in the ISO and PX markets, and to transact with the ISO, the Agencies are charged with knowledge, and are deemed to have accepted the terms, of the Tariffs, which set forth the mutual rights and obligations among market participants. The terms of the ISO and PX Tariffs create enforceable contractual obligations binding on the Agencies. See, e.g., ISO Tariff § 17 ("[o]bligations and liabilities under this ISO Tariff" are binding on parties' successors and
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assigns), § 14.3 (indemnity provisions), § 20.7 (choice-of-law, venue clauses), § 15 (provisions covering consequences of uncontrollable force). Market participants may enforce these obligations against one another. 25. Among other sales by the Agencies, during the period January 17, 2001 through
June 20, 2001, the Agencies entered into certain energy exchange transactions with the ISO, for which CERS as the fiscally responsible stand-in for the ISO ultimately paid. The exchange transactions were subject to the terms of the ISO Tariff. 26. During the period at issue, the ISO and PX calculated on a monthly basis the total
amount of electric power that each market participant supplied and purchased, including the Agencies. The ISO and the PX then issued individual billing statements, invoices, and supporting data, specifying amounts due to or from each market participant. See ISO Tariff § 11.2 ("The ISO shall calculate, account for and settle [charges for ancillary services and imbalance energy] in accordance with this ISO Tariff"). 27. CERS, as a market participant, a third party beneficiary, fiscally responsible
stand-in for the ISO, and counterparty to the Agencies' exchange transactions with the ISO, has standing to enforce the Agencies' contractual obligations under the ISO tariff and related agreements. See, e.g., ISO Tariff § 2.2.1 ("the ISO will not act as a principal but as agent" for Scheduling Coordinators). 28. Under their respective tariffs, the ISO and the PX pass through liability for market
shortfalls to market participants, including CERS, that bought or sold power in the markets during the period for which there is a shortfall of funds. A market shortfall may result if one market participant defaults on a payment, causing a shortage of total funds collected by either the ISO or the PX for distribution to the other market participants. An entity that fails to pay its bill becomes responsible for a market shortfall, and is deemed an "ISO Debtor" or a "PX Debtor."
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An entity that is owed money because of the market shortfalls is deemed an "ISO Creditor" or "PX Creditor," with the right to enforce its contractual right to payment against an ISO or PX Debtor. See ISO Tariff Appendix A (Master Definitions Supplement); PX Tariff Appendix B (Master Definitions Supplement). Thus, under the ISO and PX Tariffs, financial obligations created by market transactions were owed by one market participant to another, rather than to the ISO or PX. 29. To ensure that market participants are financially capable of satisfying obligations
running from one to the other from these transactions, the ISO and PX Tariffs require market participants to meet certain creditworthiness and collateral requirements, and require the ISO and PX to maintain financial reserve accounts funded by participants and held in trust for their benefit. See, e.g., ISO Tariff § 2.2.3.2 (creditworthiness and collateral requirements), § 11.8.3 (all ISO accounts to be operated by ISO in trust for ISO Creditors). The Tariffs empower the ISO and PX to draw on these assets to satisfy the financial obligations running from a defaulting market participant to other, non-defaulting participants. See, e.g., ISO Tariff § 11.8.2.2. 30. Moreover, under the terms of the ISO and PX Tariffs, a shortfall of funds in the
ISO or PX "clearinghouse" caused by the default of one market participant must be paid by nondefaulting market participants, rather than by the ISO or PX. See, e.g., ISO Tariff §§ 11.16.1 (if ISO cannot satisfy a market shortfall from a Reserve Account or by enforcing collateral, it shall reduce payments to all ISO Creditors to cover amounts owed to them by defaulting ISO Debtor); 11.2.9 (ISO may levy charges on market participants to cover any financial shortfall). Indemnity provisions further insulate the ISO/PX from risk. See ISO Tariff § 14.3; PX Tariff § 14.3. 31. Tariff provisions also contemplate that market participants will pursue non-payers
for payment defaults. ISO Tariff Section 11.19 expressly recognizes market participants' rights to bring suit against one another to enforce rights and obligations created by the Tariffs resulting
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from sales transactions. ISO Tariff § 11.19 (in event of payment default, "[e]ach ISO Creditor shall give notice to the ISO before instituting any action or proceeding in any court against an ISO Debtor to enforce payments due it"). See also ISO Tariff § 11.20.1 ("Without prejudice to the right of any Scheduling Coordinator to bring such proceedings as it sees fit it connection with matters related to the recovery of amounts owed to it," ISO may bring proceedings on behalf of those Scheduling Coordinators that have indicated to ISO their willingness for ISO to act first); ISO Tariff § 11.20.2 (ISO shall, on request, certify in writing the amounts owed by ISO Debtor that remain unpaid and ISO Creditors to whom such amounts are owed; ISO certificate given under this section may be used as prima facie evidence of the amount due by ISO Debtor to ISO Creditors in any legal proceedings). 32. In summary, the ISO and PX Tariffs provided the mechanisms through which
market participants bought and sold electric power, with the ISO and the PX acting as clearinghouses for such transactions, holding collateral for market participants, and settling the accounts of all market participants. Financial obligations created by market transactions, however, were owed by one market participant to another. FERC's Jurisdiction Over the ISO and PX Tariffs 33. The tariffs under which the ISO and PX operate were filed with and approved by
FERC, and are subject to FERC's jurisdiction, continual oversight and regulation. These tariffs were subject to amendment or revision by FERC. The ISO Tariff provides, for example, that in signing Scheduling Coordinator Agreements, a market participant agrees "to comply with all ISO rules, protocols, and instructions, as those rules, protocols and instructions may be amended from time to time." ISO Tariff Appendix A, Master Definitions Supplement ("Scheduling Coordinator Agreement") (emphasis added). In fact, FERC repeatedly revised the ISO and PX Tariffs during the relevant time period.
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34.
The ISO and PX Tariffs required each participant in the ISO and PX markets to
comply with all rules, conditions and provisions of the ISO and PX Tariffs. 35. The ISO and PX Tariffs provide that parties retain the right to petition FERC to
exercise its power under FPA Section 206 to review rates charged under the tariffs and provide for recalculation of charges and resettlement of the accounts of buyers and sellers under the tariffs in the event that FERC determines that any rates charged under the tariffs were unjust, unreasonable, or otherwise unlawful, and thus subject to correction. See ISO Tariff § 19; see also FPA § 206, 16 U.S.C. § 824e(a) (2000). ISO Tariff Section 19 states in part: Nothing contained in this ISO Tariff or any [Scheduling Coordinator] Agreement shall be construed as affecting the ability of any Market Participant receiving service under this ISO Tariff to exercise its rights under Section 206 of the FPA and FERC's rules and regulations thereunder. ISO Tariff § 19. 36. Under the ISO and PX Tariffs, the amount due to each seller is always subject to
revision, and settlements can be re-run, if necessitated by disputes, errors, FERC directives, or for other good cause, at any time. ISO Tariff § 11.6.3 (ISO authorized to perform Settlement Statement re-runs; request to perform Settlement Statement re-run may be made at any time by Scheduling Coordinator). 37. By executing written contracts, including ISO Scheduling Coordinator
Agreements, PX Participation Agreements, and other agreements with the ISO or PX that incorporate by reference the terms and conditions of the ISO and PX Tariffs and in which the Agencies expressly agreed to abide by the provisions of the ISO and/or PX Tariffs, and by voluntarily electing to sell electric power in the ISO and PX markets and to the ISO, the Agencies are bound by the provisions of the ISO and PX Tariffs and any modifications thereto, including FERC's orders correcting the rates that sellers could lawfully charge for sales governed by those tariffs. 13
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38.
The People are direct parties to and/or third party beneficiaries of the Agencies'
contractual obligations with respect to the exchange transactions between the Agencies and the ISO. Because the agreements pursuant to which the CERS transactions were entered into are subject to FERC's jurisdiction, all market participants, including the Agencies, recognized that FERC would exercise its regulatory authority over the transactions. If the price or terms were found by FERC to be unjust and unreasonable or otherwise unlawful, and FERC assesses refunds, all market sellers are contractually bound to refund or credit to purchasers the difference between the price initially charged and the lawful, corrected rate determined by FERC. Thus, all market participants are contractually bound to honor the terms and conditions of the tariffs, as revised by FERC, and these terms and conditions can be contractually enforced by the market participants against one another. The Agencies' obligation to refund or credit their unlawful overcharges is the same obligation owed by all sellers in the ISO and PX markets. The Power Crisis 39. Beginning in May 2000, the prices demanded by sellers in the ISO and PX
markets rose dramatically and sellers continued to demand unprecedented high prices for over a year, resulting in rates far in excess of those charged in prior and later periods. As a result of the auction provisions of the ISO and PX Tariffs, these extremely high prices were charged by all sellers in the markets, even if individual sellers had offered to sell their power in the auctions at lower prices. These artificially inflated prices also affected OOM sales, which were closely intertwined with the ISO single-price auction market. See CPUC, 462 F.3d at 1053. The power crisis ultimately imposed billions of dollars in additional costs on California ratepayers. 40. The surge in electric power prices also affected the reliability of the electric grid.
On June 14, 2000, electric power consumers in Northern California experienced their first wave
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of rolling blackouts. These blackouts foreshadowed the rolling blackouts and near-continuous power emergencies that California electric customers experienced over the next year. 41. The crisis did not subside with the arrival of cooler weather in the Fall of 2000.
Although California's peak electric power usage historically declines by roughly 25 to 33 percent during the cooler months, and declined in the Fall of 2000, prices continued to rise throughout the last quarter of 2000 and the first part of 2001. 42. By January 2001, these events led to the collapse of reliable electric service in
California. At times in January 2001, the ISO ordered rolling blackouts throughout large areas of California in order to maintain the reliability of the transmission grid. The crisis became a state of emergency, threatening the safety and welfare of California citizens. 43. On December 15, 2000, FERC issued an order eliminating the requirement that
the California investor owned utilities purchase all of their needed electric power through the PX, and the PX ceased operations of its core markets on January 30, 2001. By January 2001, the two largest California investor-owned utilities became uncreditworthy and ineligible to purchase power through the ISO and PX. 44. The State of California, through CERS, was forced to initiate a power purchasing
program, as the buyer of last resort to obtain electric power on behalf of the People to ensure continued service to retail customers throughout the territories that the People served. See Cal. Water Code sec. 80000 et seq. 45. On January 17, 2001, then Governor Gray Davis declared a state of emergency in
order to ensure a continuous supply of energy in California. In authorizing DWR to procure the power needed to keep the lights on in California, the Legislature declared that: The furnishing of reliable reasonably priced electric service is essential for the safety, health, and wellbeing of the people of California. A number of factors have resulted in a rapid, unforeseen shortage 15
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of electric power and energy available in the state and rapid and substantial increases in wholesale energy costs and retail energy rates, with statewide impact, to such a degree that it constitutes an immediate peril to the health, safety, life and property of the inhabitants of the state, and the public interest, welfare, convenience and necessity require the state to participate in markets for the purchase and sale of power and energy. Cal. Water Code §80000(a). From January through October 2001, CERS spent approximately $10 billion buying power through short-term transactions with various suppliers including the Agencies. 46. The bulk of the crippling costs of the crisis have been passed through to, and paid
by, the residential and commercial ratepayers of the State of California. These costs are included in current rates assessed to ratepayers, and will continue to be included in rates until the costs of the crisis have been paid off. By this Complaint, the People are seeking to recover from the United States the amounts that each Agency received in excess of the lawful rates for its wholesale sales of electric power to the People in the ISO and PX markets, as well as in their bilateral sales to CERS pursuant to the WSPP Agreement. Amounts recovered by the People will ultimately benefit California ratepayers. California Sought Relief From FERC 47. On August 2, 2000, when it became clear that the extremely high wholesale prices
were not returning to the lower levels that had prevailed historically, San Diego Gas &Electric Company ("SDG&E") filed a complaint with FERC under the FPA against all sellers of energy and ancillary services into markets operated by the ISO and PX. FERC Docket No. EL00-95. The two other California investor-owned utilities and the California Electricity Oversight Board intervened in that proceeding on August 14, 2000. The Agencies were parties to that proceeding, BPA having intervened on November 22, 2000, and WAPA on October 24, 2000. The Attorney 16
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General of the State of California also intervened in the proceeding to represent the interests of the People of the State of California. In that proceeding, the California Parties, including the People, requested that FERC investigate the justness, reasonableness, and lawfulness of rates being charged in the California ISO and PX markets and that FERC order refunds to the extent that FERC determined that sellers had charged unjust, unreasonable, or otherwise unlawful rates. 48. In response to SDG&E's complaint, FERC commenced its own investigation into
the sellers' rates, which it consolidated with SDG&E's complaint. Collectively, the associated proceedings are referred to as the "Remedy Proceeding." In an order issued July 25, 2001 (the "July 25, 2001 Order"), FERC ruled that sellers of electric power in the ISO and PX markets (including the Agencies) had sold electric power at unjust, unreasonable, and unlawful rates, and that the rates charged in the ISO and PX markets should be corrected for the Refund Period. FERC Docket No. EL00-98-000. See San Diego Gas & Electric Co., 96 FERC ¶ 61,120 (2001). 49. In the July 25, 2001 Order, FERC held: "Our action here establishes a revised
method for calculating the just and reasonable clearing prices to be applied in those markets for the period beginning October 2, 2000. This is pursuant to the Commission's authority under FPA section 206 to fix the just and reasonable rate. Our action thus revises the market clearing prices that all market participants previously agreed to accept for their sales." July 25, 2001 Order, 96 FERC at 61,512. 50. FERC refused to correct the rates for "energy exchange" transactions (in which
blocks of electric power were sold to the ISO for payment in-kind) made during the Refund Period. See July 25, 2001 Order, 96 FERC at 61,499; see also San Diego Gas & Electric Co., 102 FERC ¶ 61,317 at 62,084 (2003); CPUC, 462 F.3d at 1059. 51. To remedy the unlawful prices charged in the market during the Refund Period,
FERC has, in a series of orders beginning with the July 25, 2001 Order, adopted a methodology
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to recalculate, on a market-wide basis, the just and reasonable prices that all sellers should have received under the ISO and PX Tariffs. In lieu of the auction pricing mechanism previously provided in the ISO and PX Tariffs, which resulted in unlawful prices, FERC's methodology effectively revised the ISO and PX Tariffs to determine the corrected, maximum rates that could be charged under those tariffs. These corrected, maximum rates were called the "Mitigated Market Clearing Price," or "MMCP." FERC ordered the ISO and PX to apply the MMCP to sales during the Refund Period, including to OOM sales, so as to recalculate the charges that all sellers should have received for each interval during the Refund Period in place of the previous unlawful prices. 52. FERC ordered the ISO and PX to calculate the amounts that sellers were required
to refund or credit to buyers under the July 25, 2001 Order. July 25, 2001 Order, 96 FERC at 61,516. Pursuant to FERC's direction, the ISO and the PX have recalculated the accounts of all sellers and buyers in the ISO and PX markets to reflect the corrected rates for the Refund Period in accordance with the July 25, 2001 Order and the subsequent related FERC orders. 53. The California Parties, including the People, petitioned the Ninth Circuit for
review of the July 25, 2001 Order and subsequent FERC rehearing orders on the ground, inter alia, that FERC was also required to correct the rates for sales made during the Summer Period. The California Parties also appealed the July 25, 2001 Order on the ground that FERC was required to correct the rates for energy exchange transactions and multi-day sales made during the Refund Period. A number of electricity sellers petitioned the Ninth Circuit seeking to overturn, inter alia, FERC's determination that OOM transactions were subject to price mitigation. 54. On August 2, 2006, the Ninth Circuit issued its decision in CPUC. In that
decision, the Court upheld FERC's determination that ISO OOM transactions should be subject
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to refund in the Remedy Proceeding. CPUC, 462 F.3d at 1052. The Ninth Circuit noted that the "Remedy Proceedings were not limited to the Cal-ISO and CalPX single-price auction markets," and that, with respect to refund liability, "there was no meaningful distinction to be drawn between the in- and out-of-market transactions." Id. at 1052-1053. 55. In the same opinion, the Ninth Circuit overturned FERC's categorical rejection of
potential relief for the Summer Period and for multi-day and energy exchange transactions, finding FERC's rulings on these points to be arbitrary, capricious, an abuse of discretion, and unsupported by the record, and remanded those issues to FERC. CPUC, 462 F.3d at 1051, 10581061. By virtue of the CPUC decision, energy exchange transactions shall be mitigated on the same basis as energy sales. 56. The question of relief for the Summer Period and other non-mitigated Refund
Period transactions was also at issue in a second FERC proceeding, separate from the Remedy Proceeding. In a petition to the Ninth Circuit for review of orders in that separate FERC proceeding, the Ninth Circuit held that FERC had erred by concluding that it lacked authority to order refunds for the Summer Period transactions and for other non-mitigated transactions during the Refund Period, and remanded the case so that FERC, "in the first instance," could reconsider whether refunds are appropriate for those transactions. California, ex rel. Lockyer v. FERC, 383 F.3d 1006, 1016-18 (9th Cir. 2004), petition for certiorari pending. Market Manipulation Resulted in Windfall Profits for All Sellers 57. FERC recognized early on that market manipulation could have negatively
affected the California markets. On November 1, 2000, FERC noted that "there is clear evidence that the California market structure and rules provide the opportunity for sellers to exercise market power when supply is tight and can result in unjust and unreasonable rates under the
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[Federal Power Act]." San Diego Gas & Electric Co., 93 FERC ¶ 61,121 at 61,350 (2000) ("November 1 Order"). 58. FERC initially refused the California Parties' attempts to obtain discovery and
introduce into the Remedy Proceeding evidence of sellers' market manipulation and tariff violations, but in May 2002, acting in a separate non-public docket, FERC released memoranda that described how Enron and other sellers had manipulated the ISO and PX markets in order to increase prices throughout the power crisis. In response, FERC propounded discovery requests to all sellers in the ISO and PX markets regarding market manipulation. On August 23, 2002, the Ninth Circuit directed FERC to allow the California Parties to adduce in the Remedy Proceeding evidence of sellers' market manipulation and tariff violations. As a result of the Ninth Circuit's order, the California Parties conducted discovery from late 2002 to early 2003 of sellers in the ISO and PX markets, including the Agencies. That discovery provided evidence of a pattern of market manipulation and tariff violations involving numerous sellers in the ISO and PX markets. 59. The California Parties' discovery uncovered evidence that certain sellers in the
market engaged in various forms of market manipulation and tariff violations that created the false perception of scarcity in the market and that drove up market prices. For example, sellers practiced physical and economic withholding of generation. This allowed suppliers to increase the price of electricity by keeping large amounts of electric power off the market. Physical withholding occurred when a generator refused to place a supply bid with the PX even when it had power available, or when it falsely reported an outage at a generating plant. Economic withholding occurred when a seller placed high bids unrelated to its generation costs to create the false appearance of scarcity, and so to drive prices higher than true competitive levels would have provided.
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60.
Certain sellers in the market engaged in other gaming strategies - the infamous
"Fat Boy," "Death Star," and "Ricochet" schemes, among others - and often used other market participants to assist them with these gaming strategies. Notes and tapes of telephone conversations among energy traders revealed discussions about traders' submission of "fake load" in the market, about their intent to "push the price up and keep the price up," and about their implementation of bidding strategies that would signal other market participants to withhold electric power from the market through physical or economic means. 61. Once this information was available, it became evident that market fraud and
manipulation were significant causes of the California energy crisis. Since the end of the California energy crisis, numerous energy traders and executives have pled guilty to, or been indicted on, criminal charges, and many have specifically admitted to market manipulation activities. 62. Because all sellers in the ISO and PX auctions received the same market-clearing
prices set by those auctions, the artificially inflated prices created windfall profits for all sellers in the ISO and PX markets, benefitting even those sellers that did not engage in market manipulation. These artificially inflated auction prices also affected OOM sales, which were closely intertwined with the ISO single-price auction market. See CPUC, 462 F.3d at 1053. FERC's July 25, 2001 Order and subsequent orders have ameliorated the effects of market manipulation on the transactions that they addressed by correcting the prices charged by sellers in the ISO and PX markets. The Ninth Circuit's Bonneville Decision 63. FERC ruled in a series of decisions that its power to enforce sellers' payment of
refunds under the FPA extended to governmental entities, including the Agencies. As FERC explained in the July 25, 2001 Order: "[W]e see no reason to treat [the Agencies] differently
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[from other non-governmental entity sellers], as they are receiving the same price, the just and reasonable market clearing price established pursuant to market rules approved by this Commission, that they expected to obtain for their wholesale sales in the centralized ISO and PX spot markets." July 25, 2001 Order, 96 FERC at 61,512. Certain governmental entities, including BPA, appealed this decision to the Ninth Circuit. On September 6, 2005, the Ninth Circuit ruled that FERC lacked statutory authority directly to enforce governmental entities' refund obligations under the ISO and PX Tariffs. Bonneville Power Admin. v. Federal Energy Regulatory Comm'n, 422 F.3d 908 (9th Cir. 2005). The Court noted, however, that market participants may have, as an alternative remedy, the ability to bring claims in court directly against governmental entities, like the Agencies, to enforce the contractual obligations created by the operative tariffs and related agreements. Bonneville, 422 F.3d at 925-926. 64. The Ninth Circuit observed that the governmental entities' agreement to abide by
the ISO and PX Tariffs "[serves] to demonstrate that the remedy, if any, may rest in a contract action, not a refund action. Such an approach is not novel . . . ." Id. at 925 (citing Alliant Energy v. Neb. Pub. Power Dist., 347 F.3d 1046, at 1050-51 (8th Cir. 2003)). The Ninth Circuit quoted with approval the Eighth Circuit's holding in Alliant Energy that "[w]hen a contract provides that its terms are subject to a regulatory body, all parties to that contract are bound by the actions of the regulatory body . . . . As a result, we are not enforcing the FERC order; instead, we are enforcing an agreement, which [the Agency] freely entered."). Bonneville, 422 F.3d at 926 (quoting Alliant Energy, 347 F.3d at 1050). The Ninth Circuit has not yet issued the mandate in Bonneville. 65. In this Complaint, the People seek to enforce in this Court the Agencies'
contractual obligations to refund the amounts they charged in excess of the lawful corrected rates, as suggested by the Ninth Circuit in Bonneville.
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66.
Prior to the Ninth Circuit's Bonneville decision on September 6, 2005, no claim
accrued and no limitations period commenced to run. Following Bonneville, on December 5, 2005, the People complied with the CDA by serving a written claim on BPA, providing it with notice of the People's present claims for relief. On December 29, 2005, the People complied with the CDA by serving a written claim on WAPA, providing it with notice of the People's present claims for relief. On December 29, 2005, the People served BPA with an amended claim. On January 11, 2006, the People served BPA with a Second Amended Claim for Damages. Both BPA and WAPA sent letters to the People seeking additional information related to the claims. On March 16, 2006, BPA sent the People a letter explicitly denying their claims. The letter was signed by Allen L. Burns as "Contracting Officer." On March 23, 2006, WAPA sent the People a letter explicitly denying their claims. The letter was signed by Thomas R. Boyko and Bradley S. Warren as "Contracting Officers." The BPA and WAPA denial letters are attached to this Complaint as Exhibits D and E respectively, and fully incorporated herein. 67. The People's claims are timely. 28 U.S.C. § 2501; 41 U.S.C. § 609(a). CLAIMS FOR RELIEF FIRST CLAIM Breach of Contract (Refund Period) 68. 69. The People incorporate by reference the allegations set forth above. All sellers in the ISO and PX markets, including WAPA, were charged with
knowledge that the market prices, and the formulae and/or market rules that set the prices, were subject to revision if they were found by FERC to contravene the requirements of the FPA. By voluntarily choosing to sell electric power at wholesale in the ISO and PX markets, and by executing ISO Scheduling Coordinator Agreements, PX Participation Agreements, and/or other agreements with the ISO or PX, and/or other agreements, WAPA contractually agreed to be
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bound by the provisions of the ISO and PX Tariffs, which incorporate FERC's power to correct prices that it determines to be unjust, unreasonable, or unlawful. 70. Pursuant to its authority under the FPA, FERC revised the tariffs and corrected
the prices that market participants were entitled to receive for their sales during the Refund Period by adopting the MMCP. Upon FERC's correction of the rates charged by sellers, including WAPA, in the ISO and PX markets, the corrected rates became the only lawful and authorized rates for those sales under the applicable tariffs. 71. The United States is now contractually obligated to reimburse the People for the difference between the rates that WAPA initially charged for its sales in the ISO and PX markets, for which CERS paid, and the MMCP. WAPA has refused to refund, and continues to refuse to refund, to the People the amounts that it received in excess of the MMCP during the Refund Period. 72. WAPA's conduct constitutes a breach of its contractual obligations, entitling the
People to judgment against the United States for all amounts that WAPA received in excess of the lawful rate attributable to its wholesale sales of electric power for which CERS paid in the ISO and PX markets during the Refund Period, plus associated interest. The People are informed and believe and thereupon state that this principal amount of this sum is in the range of $2,000,000, excluding applicable interest. SECOND CLAIM Anticipatory Breach of Contract (Refund Period) 73. 74. The People incorporate by reference the allegations set forth above. This claim is pleaded in the alternative to the First Claim. If it is determined that
the date by which WAPA would be obligated under the applicable contracts to refund to the People the amounts WAPA received in excess of the MMCP during the Refund Period has not
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yet occurred, WAPA has nonetheless become obligated to make such refunds immediately, and in advance of such date, because it has wrongfully denied and repudiated any legal duty to so repay the People. 75. Upon WAPA's repudiation of its contractual obligations, the People became
entitled to sue for breach of contract. WAPA's conduct constitutes an anticipatory breach of its contractual obligations, entitling the People to judgment against the United States for all amounts that WAPA received in excess of the lawful rate attributable to its wholesale sales of electric power for which CERS paid in the ISO and PX markets during the Refund Period, plus associated interest. The People are informed and believe and thereupon state that this principal amount of this sum is in the range of $2,000,000, excluding applicable interest. THIRD CLAIM Declaratory Relief (Refund Period) 76. 77. The People incorporate by reference the allegations set forth above. A controversy has arisen in that WAPA has denied that it has any liability for
overcharges associated with transactions during the Refund Period for which FERC has ordered relief. The People seek a declaration that the People are contractually entitled to recover from the United States all amounts that WAPA charged in excess of the lawful rate attributable to WAPA's sales in the ISO and PX markets, for which CERS paid, during the refund Period. FOURTH CLAIM Declaratory Relief (ISO and PX Accounts) 78. 79. 80. The People incorporate by reference the allegations set forth above. This Claim is pleaded in the alternative to the First, Second, and Third Claims. A controversy has arisen in that the Agencies have denied that they have any
liability to CERS to refund their overcharges associated with their sales and/or energy exchanges
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at such time as FERC corrects the prices for those transactions. The People seek a declaration that the United States is contractually obligated to permit the Agencies' accounts at the ISO and PX to be adjusted to reflect all pricing changes resulting from FERC's determination of the corrected, maximum rates allowed for sales in the ISO and PX markets and the recalculation by the ISO and PX pursuant to FERC's direction, and is contractually obligated to pay any refunds and to otherwise honor the invoices reflecting the refunds associated with all affected transactions. FIFTH CLAIM Declaratory Relief (Exchanges) 81. 82. The People incorporate by reference the allegations set forth above. A controversy has arisen in that the Agencies have denied that they will have any
liability to the People to refund their overcharges associated with energy exchanges at such time as FERC corrects the prices for these transactions. Pursuant to the Ninth Circuit's decision in CPUC, FERC's decision not to provide relief for energy exchanges during the Refund Period has been reversed. The People seek a declaratory judgment that at such time as FERC corrects the rates charged by sellers for energy exchanges during the Refund Period, the People will be entitled to recover from the United States the difference between the rates the Agencies initially charged in the exchange transactions and the lawful rates as ultimately determined by FERC, plus associated interest. SIXTH CLAIM Declaratory Relief (Multi-Day Sales) 83. The People incorporate by reference the allegations set forth above.
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84.
A controversy has arisen in that BPA has denied that it will have any liability to
the People to refund its overcharges associated with multi-day sales at such time as FERC corrects the prices for these transactions. Pursuant to the Ninth Circuit's decision in CPUC, FERC's decision not to provide relief for multi-day sales during the Refund Period has been reversed. The People seek a declaratory judgment that at such time as FERC corrects the rates charged by sellers for multi-day sales during the Refund Period, the People will be entitled to recover from the United States the difference between the rates the Agencies initially charged for multi-day sales and the lawful rates as ultimately determined by FERC, plus associated interest.
SEVENTH CLAIM Declaratory Relief (WSPP Agreement) 85. 86. The People incorporate by reference the allegations set forth above. At the time of the bilateral sales transactions between CERS and the Agencies,
CERS and the Agencies had all signed the WSPP Agreement which was a voluntary agreement that governed the bilateral sales transactions between CERS and the Agencies. Pursuant to section 13.1 of the WSPP Agreement, the Agencies agreed to be bound by the "valid laws, orders, rules and regulations of duly constituted authorities having jurisdiction." Section 13.1 of the WSPP Agreement represented the Agencies' contractual promise to be bound by any order regarding, among other things, the terms, prices and conditions of the WSPP Agreement, as revised from time to time by FERC. 87. All sellers, including the Agencies, agreed and were charged with knowledge that
the pricing schedules in the WSPP Agreement, including the ability to negotiate rates as set forth therein, were subject to revision if they were found by FERC to contravene the requirements of the FPA. By voluntarily choosing to sell electric power in bilateral sales as alleged above,
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and/or by voluntarily choosing to be bound by the contractual terms of the WSPP Agreement, or other agreements, the Agencies contractually agreed to be bound by any FERC decision to revise and correct any term, price or condition set forth in the WSPP Agreement, or other agreements, that FERC determined to be unjust, unreasonable, or unlawful. 88. A controversy has arisen in that the Agencies have denied that they will have any
liability to the People to refund their overcharges associated with bilateral sales transactions pursuant to the WSPP Agreement at such time as FERC corrects the prices for these transactions. The Ninth Circuit Court of Appeals in Port of Seattle has ordered FERC to reconsider FERC's denial of refunds on bilateral transactions in the Pacific Northwest pursuant to the WSPP Agreement. The People seek a declaratory judgment that at such time as FERC corrects the rates charged by sellers for bilateral sales transactions pursuant to the WSPP Agreement during the applicable refund period as determined by FERC, the People will be entitled to recover from the United States the difference between the rates the Agencies initially charged CERS for purchases made pursuant to the WSPP Agreement and the lawful rates as ultimately determined by FERC, plus associated interest. EIGHTH CLAIM Declaratory Relief (Contractual Liability for Market Shortfall) 89. 90. The People incorporate by reference the allegations set forth above. Because the ISO and PX are revenue-neutral entities, the Agencies' refusal to
honor their repayment obligations will result in a shortfall of funds needed to settle the accounts of ISO and PX participants. Under the terms of the ISO and PX Tariffs, other market participants, including CERS, may therefore be required to pay for any resulting market shortfall. 91. Any reductions in CERS' accounts to pay for any market shortfall caused
by the Agencies' refusal to honor their contractual repayment obligations will constitute amounts
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due and owing by the Agencies, as ISO Debtors and PX Debtors, to CERS as ISO Creditor and/or PX Creditor. CERS, as a market participant, is entitled under the ISO and PX Tariffs to bring proceedings directly against the United States to recover these amounts owed. A controversy has arisen in that the Agencies have denied that they have any obligation to disgorge amounts they received in excess of the lawful rate. 92. The People seek a declaratory judgment that the United States will be
contractually liable to CERS for any amount assessed against CERS' accounts due to the Agencies' refusal to honor their repayment obligations, as well as for all additional costs and expenses incurred by CERS as a result of the Agencies' refusal to honor their repayment obligations. NINTH CLAIM Breach of Covenant of Good Faith and Fair Dealing 93. 94. The People incorporate by reference the allegations set forth above. Every contract has an implied covenant of good faith and fair dealing, i.e., an
implied duty that each party to a contract owes to its contracting partner. This covenant applies to government contracts, as well as contracts between private parties. 95. The People are informed and believe and thereupon state that BPA breached this
covenant as follows: BPA knew or was on notice of conduct in the Western energy markets inconsistent with legitimate energy transactions, including but not limited to "Ricochet" transactions by which power was removed from California in the day ahead market and returned to California in the real time or last minute market; BPA took no action to stop such conduct; and BPA was also a beneficiary of the extraordinary prices caused by market manipulation. The People are further informed and believe and thereupon state that BPA engaged in conduct inconsistent with legitimate energy transactions during the Summer of 2000, that further
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investigation and discovery are likely to disclose that BPA continued to engage in such conduct subsequently during the period of the energy crisis. 96. The People seek a judgment against the United States for the difference between
the amount paid and the amount which should have been paid in the absence of Defendant's breach of the covenant. The People are informed and believe and thereupon state that the principal amount of this sum is in the range of $171,000,000, excluding applicable interest. TENTH CLAIM Declaratory Relief (Lack of Consent) 97. 98. The People incorporate by reference the allegations set forth above. The consent of CERS to each of the transactions with Agencies between January
17, 2001, and June 20, 2001, was not real, mutual, or free in that CERS's consent was obtained solely through duress and undue influence exercised by Agencies or, alternatively, the result of mutual mistake. At a time when the State was suffering from a crippling energy crisis, Agencies took unfair advantage of the state of emergency to demand exorbitant prices for energy and onerous terms in exchanges and in all other transactions between the parties. Alternatively, CERS and Agencies transacted to buy and sell electricity on the basic premise and assumption of the existence of a critical energy shortage. Not until over two years after the start of the crisis did the parties learn that the energy shortage was artificially created by market manipulation. Each of the transactions was contrary to the public policy of the State of California and to the public interest within the meaning of California Civil Code §1689. 99. CERS seeks a declaration that all of the transactions between CERS and Agencies
for the period from January 17, 2001 through June 20, 2001, are void and of no force or effect on the grounds that CERS's agreements to the terms of each of the transactions was induced by duress, undue influence, and/or mutual mistake and/or that the transactions were contrary to the
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public policy of the State of California and to the public interest within the meaning of California Civil Code §1689. ELEVENTH CLAIM Rescission and Restitution (Lack of Consent) 100. 101. The People incorporate by reference the allegations set forth above. The consent of CERS to each of the transactions with Agencies between January
17, 2001, and June 20, 2001, was not real, mutual, or free in that CERS's consent was obtained solely through duress and undue influence exercised by Agencies or, alternatively, the result of mutual mistake. At a time when the State was suffering from a crippling energy crisis, Agencies took unfair advantage of the state of emergency to demand exorbitant prices for energy and onerous terms in exchanges and in all other transactions between the parties. Alternatively, CERS and Agencies transacted to buy and sell electricity on the basic premise and assumption of the existence of a critical energy shortage. Not until over two years after the start of the crisis did the parties learn that the energy shortage was artificially created by market manipulation. Each of the transactions was contrary to the public policy of the State of California and to the public interest within the meaning of California Civil Code §1689. 102. But for the apparent energy shortage, CERS never would have been compelled to
purchase energy from the Agencies. CERS has suffered substantial harm as a result of the transactions with the Agencies and seeks to rescind each of the transactions with the Agencies from January 17, 2001, through June 20, 2001. 103. As a result of entering into the energy transactions with the Agencies between
January 17, 2001, and June 20, 2001, CERS has incurred consequential damages in an amount to be established according to proof. 104. CERS intends the complaint in this action to serve as notice of rescission of all
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PRAYER FOR RELIEF WHEREFORE, the People pray for relief against the United States as follows: 1. For judgment against the United States for all amounts that WAPA received in
excess of the lawful rate attributable to its wholesale sales of electric power for which CERS paid in the ISO and PX markets during the Refund Period, plus associated interest. The People are informed and believe and thereupon state that this principal amount of this sum is in the range of $2,000,000, excluding applicable interest; 2. For a judgment against the United States declaring that the People are
contractually entitled to recover from the United States all amounts that WAPA charged in excess of the lawful rate attributable to WAPA's sales in the ISO and PX markets, for which CERS paid, during the Refund Period; 3. In the alternative, for a judgment against the United States declaring that the
United States is contractually obligated to permit the Agencies' accounts at the ISO and PX to be adjusted to reflect all pricing changes resulting from FERC's determination of the corrected, maximum rates allowed for sales in the ISO and PX markets and the recalculation by the ISO and PX pursuant to FERC's direction, and is contractually obligated to pay any refunds and to otherwise honor the invoices reflecting the refunds associated with all affected transactions; 4. For a judgment against the United States declaring that at such time as FERC
corrects the rates charged by sellers for energy exchanges during the Refund Period, the People will be entitled to recover from the United States the difference between the rates the Agencies initially charged in the exchange transaction and the lawful rates as ultimately determined by FERC, plus associated interest; 5. For a judgment against the United States declaring that at such time as FERC
corrects the rates charged by sellers for multi-day sales during the Refund Period, the People will
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be entitled to recover from the United States the difference between the rates the Agencies initially charged for multi-day sales and the lawful rates as ultimately determined by FERC, plus associated interest; 6. For a judgment against the United St